Sorry, But Congress Is Still Miles Away From A Deal On The Payroll Tax Cut

Yes, Republicans have indicated they would support an extension (and possible expansion) of the payroll tax cut which provides the average American family about $1,000 in extra spending money each year, but we’re still far away from a deal.The sticking-point, save for with a few lawmakers, has really never been about the payroll tax cut itself, rather how to you foot the price tag (which is over $100 billion, and tops $250 billion if you expand the tax break as Democrats want).

Democrats want a 3.25 per cent millionaires surtax on income over $1 million — a proposal Republicans are calling a non-starter and a political stunt. Nevertheless, that is the “pay-for” that will be voted on in the Senate this week, where it just might pass, before facing certain doom in the House of Representatives.

After the failure of the Super Committee, some Republicans are trying to tie the tax cut extension to a modification of the “sequesters” — the automatic spending cuts to the Department of defence and other agencies. The White House has threatened a veto on any measure that modifies those deficit-cuts.

If taxes are off the table, then Democrats and Republicans will have to find spending cuts to avoid adding to the deficit, something most Republicans would probably block anyway. Lawmakers then run the risk of lessening the impact of their job-creating tax cut, but cutting government programs to pay for it.

There just aren’t enough budget gimmicks left to pay for it any other way.